MILAN — There’s little sign M&A deals will slow down in the second half of 2019 after a “boom” last year and a significant increase in transactions in 2019 so far, with Europe leading in terms of sheer numbers, according to the Deloitte Global Fashion & Luxury Private Equity and Investors Survey 2019.
According to Deloitte, investments will continue to focus on the cosmetics and fragrances sector, together with the apparel and accessories businesses, underscoring the importance of personal luxury for private equity funds. The study also underscores that investors continue to be optimistic despite worries over a possible global economic slowdown, believing the luxury market will grow between 5 and 10 percent a year.
After the sale in July of the Roberto Cavalli brand to Vision Investment Co. LLC, controlled by Hussain Sajwani, founder and chairman of the Dubai-based Damac Properties Group, and Trussardi to Quattro R Asset Management Co. earlier this year, a number of Italian companies are facing generational changes or need additional financial resources to be able to compete with the industry’s fashion giants.
As reported, OTB, which controls Diesel, Maison Margiela, Marni, Paula Cademartori, Viktor & Rolf and production arms Staff International and Brave Kid, was also interested in buying the Cavalli brand, as Staff International is Just Cavalli’s licensee. In July, OTB, founded by Renzo Rosso, increased its stake in Viktor & Rolf to 70 percent from 51 percent, which it had acquired in 2008 and in June it bought a stake in Amiri, the Los Angeles-based brand founded by Mike Amiri. Reporting its 2018 figures in April, OTB emphasized the strength of its net financial position, totaling 111 million euros, up 32 percent compared with 2017, paired with a solid net equity standing at 885 million euros. Commenting on the 2018 performance, chief executive officer Ubaldo Minelli told WWD that last year was one of “voluntary resetting,” and that there could be some M&A activity ahead.
Acquisition rumors continue to swirl around storied brands such as Buccellati, sold to the Gangtai Group in China at the end of 2016, and Etro, although the company has denied it is for sale. According to sources, investors have been looking at the family-owned fashion brand, which last year celebrated its 50th anniversary with an exhibition in Milan named “Generation Paisley” — a reference to the company’s most recognizable pattern. Market sources speculate that an Italian buyer would be more welcome to the Etro family.
Rumors about Qatar-based Mayhoola looking at Etro have been quieting down. Sources actually believe Mayhoola, which also counts Valentino, Balmain and the Italian men’s label Pal Zileri among its investments, and which in March split from Anya Hindmarch Ltd., is rethinking its investments in fashion — despite its runaway success with Valentino and its ambitions to build Balmain.
Flush with cash, in February Kering chairman and ceo François-Henri Pinault signaled that the group is on the hunt for acquisitions to continue to build out its luxury portfolio. This has led to ongoing rumors about Gucci’s parent looking at Italian brands, including Etro and Valentino.
During the most recent call with analysts to discuss first-half results, Moncler’s chairman and ceo Remo Ruffini was asked by one analyst about remaining independent compared with large fashion conglomerates. Ruffini responded that he felt “really very confident in staying alone. Our strategy is quite unique and helps us to talk to our customers.” He said he did not really see many advantages in being part of a big group, “except maybe in terms of real estate. I feel really good honestly.”
At the same time, Moncler, which continues to log increases in sales and profits, is also at the heart of market rumors as a buyer, although Ruffini has repeatedly said he is focused on building the brand and its Genius project. During the call in July, asked about possible investments, Ruffini said there are “few interesting companies, not that many.” As the analyst who posed the question mentioned Stone Island, the executive admitted it was “a very good brand,” but did not elaborate.